Tactics is always a must. What you describe is similar to me about 2 years ago. Sounds like "performance anxiety". You worry about the game, what others think and afraid to make a fool out of oneself. Not saying you just me!!
I got over it by telling myself I am here to compete and if I lose so what. I also tried to relax before a game by certain mental exercises like meditation. I know it may all sound ridiculous but for me it worked. I go to a game now totally relaxed, I laugh about some of the stupid moves I made and approach the competition as something enjoyable rather than something less so.
I still have my off games but every now and then I surprise even myself with a win over a player 300 points over me.
I'm puzzled--I am much better at online chess than I am at live chess. I think through moves very carefully in online chess, because I have time. When I get to live chess, all of my insight seems to fly away. I'm sure this is a common problem--so, what's the best way to improve my live chess? Simply play more? Study tactics? Some sort of psychological tricks? What?